Cape Town - Woolworths, the listed clothing and food retailer, has boosted its interim distribution to shareholders by 42.3 percent to 18.5c, way ahead of the 16.2 percent increase to 46.7c in its headline earnings a share.
Still, the share price dipped by 6.1 percent on the news to an intraday low of R9.90.
Analysts said this could partly be because of the market's slight disappointment with the lower-than-expected earnings performance.
No indications that earnings would miss expectations was given in the company's trading update last month.
However, Woolworths was not the only retailer whose share price fell in intraday trading. Edgars Consolidated Stores, Foschini and Truworths all lost ground during trading, although not to the same extent as Woolworths.
Simon Susman, the chief executive, said the group had reduced its dividend cover (based on earnings a share) for the last two years at the year-end stage, but this was the first time it was reduced at the interim stage.
He said the increased dividend was also supported by healthy cash-flow generation.
The latest results for the half-year to December showed that the dividend cover was reduced to 2.5 times from 3.1 times in the corresponding period the previous year.
Group turnover grew by 14.3 percent to R6.02 billion, fuelled by a strong performance in the foods division, where turnover grew by 20.6 percent to R2.75 billion.
Woolworths share price lost 20c to close at R10.30 on the JSE Securities Exchange, while the general retail sector lost 0.51 percent.